TAILIEUCHUNG - Lecture Intermediate accounting (Volume 1, 11th Canadian edition) – Chapter Appendix 7: Cash and receivables

Lecture Intermediate accounting (Volume 1, 11th Canadian edition) – Chapter Appendix 7: Cash and receivables. After studying Appendix 7A, you should be able to explain common techniques for controlling cash. | 1 CHAPTER 7: APPENDIX 2 2 Chapter 7: Cash and Receivables After studying Appendix 7A, you should be able to: 11. Explain common techniques for controlling cash. 3 3 Using Bank Accounts Using different bank accounts for different purposes General chequing account Used for day-to-day activities Imprest bank accounts Used for specific purposes Lockbox accounts Used for collections in subsidiary locations Arrangements made with a local bank to pick-up and deposit funds received Allows for quicker collection and availability of cash 4 4 LO11 Imprest Petty Cash System Designed for disbursements where payment by cheque is impractical Control processes/procedures include the following: Designate a petty cash custodian Custodian is responsible for getting a receipt for each authorized disbursement Custodian prepares a summary of petty cash receipts and disbursements each time the fund requires reimbursement Cheque is prepared and transactions recorded by someone other than the custodian 5 5 LO11 Imprest Petty Cash System Cash Over and Short account used when the cash in the fund plus dollar amount of receipts does not equal the balance of the petty cash fund Additional control procedures include: Unscheduled fund counts to ensure fund balance is maintained Receipts are marked (after being submitted for reimbursement) in some way to ensure they cannot be used again 6 6 LO11 Imprest Petty Cash System: Example A petty cash fund is established for $300. A cheque is issued (for cash), with the following entry made: Petty Cash 300 Cash (Bank) 300 No entries are required when petty cash disbursements are made 7 7 LO11 Imprest Petty Cash System: Example Petty cash is reconciled and replenished when the fund is low enough to warrant a cheque being issued or at the end of an accounting period The following disbursements were made: Office Supplies $42 Postage 53 Entertainment 76 Total $171 The custodian counts the cash and finds there is $127 cash. The fund is $2 short ($300 – $171 =

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• Intermediate accounting
• Lecture Intermediate accounting
• Financial reporting
• Financial asset
• Restricted cash
• Accounts receivable
• Financial Accounting
• Accounting process
• Accounting equation
• Accounting processing cycle
• Stock issuance
• Estimating reserves
• Liquidating dividends
• Accounting changes
• Error corrections
• Accounting choices
• Theoretical structure
• Accrual accounting
• Financial accounting environment
• Accounting for leases
• Leasing environment
• Accounting by lessee
• Special accounting problems
• Cash versus accrual accounting
• International standard setting
• Accounting standards
• Accounting assists
• The challenges facing accounting
• Income taxes
• Accounting for income taxes
• Deferred tax liabilities
• Error analysis
• Accounting policy
• Accounting estimate
• Accounting policies
• Accounting information system
• Measurement issues
• Characteristics of accounting
• Capital allocation process